APPLIED ECONOMICS

I - MULTIPLE CHOICE. Choose the correct answer. Write the letter only
1. By unlimited human wants, we mean:
A. people are greedy and could never be satisfied
B. people wish to consume more goods and services in total than the economy have the resources
to produce
C. a person can never get enough of a particular good or service
D. all of the above
2. The definition of Economics includes the ideas of
A. how people live by producing scarce goods and services
B. how people live by distributing scarce goods and services
C. how people live by consuming scarce goods and services
D. all of the above
3. The three basic economic questions that every society must answer the following:
A. What, how and when B. What, for whom and how
C. Who, what and where D. Where, when and how
4. An example of a microeconomic problem would be
A. the inflation vs. unemployment trade-off
B. the economic growth vs equity dilemma over time
C. the trade deficit vs. federal expenditures deficit trade-off
D. none of the above
5. The main usefulness of the production possibility frontier is to illustrate
A. the law of decreasing costs B. the impact of scarcity in the economy
C. the equity problem of income distributionD. the pace of technological change
6. Economic growth and technological change
A. cannot be shown by the production possibility model
B. occur only because of the increases in the quantity of inputs available to the economy
C. do not necessarily shift the production possibility frontier to the same degree and amount for
each of the commodities involved
D. will tend to be greater for those quantities that emphasize current consumption
7. Among the major theoretical contributions of Adam Smith is/are
A. The notion of the invisible hand
B. The appropriate use of protectionism against low wages overseas
C. The inflation-unemployment trade-off
D. The emphasis on collective consumption and collective decision-making
8. Choice is important in Economics because
A. people find it difficult to select what they want
B. resources are scarce in relation to people’s wants
C. the need to choose makes people think about what to consume
D. prices depend on people making choices
9. Which of the following is not true about Maslow’s hierarchy of needs?
A. Different people have different needs based on the level of their needs
B. As you to up to another level your needs and wants increases as the resources decreases
C. It is formulated by Adam Smith
D. There are five levels of needs
10. What term appropriately defines Economics?
A. Decision Making B. Budget Keeping
C. Household Management D. Resource Management
11. The theory of utility maximization is that everyone tries to get the most out of his or her budget by:
A. buying only important goods such as food, clothing, and shelter
B. getting the most utility out of each added dollar spent
C. maximizing the marginal utility of each good and service purchased
D. spending to the point where total utility is at its peak for each good and service
12. A decrease in the demand for good A can be caused by
A. higher prices of good A, a decrease in consumer incomes, and/or change in consumer taste
B. simply a decrease in the price of good A, according to the law of demand
C. lower prices of complementary goods, coupled with a change in consumer tastes and incomes
D. a decrease in consumer incomes, lower prices of substitute goods, and/or changes in consumer Tastes
13. The legal authorization to organize a business or corporation is called
A. Stock B. Charter C. Articles of Incorporation D. Partnership Agreement
14. The following are the natures of cooperatives except
A. All members have an equal say B. It has an open and voluntary membership
C. Has limited interest on shared capital D. It aims to maximize its profits and benefits
15. It is a kind of partnership wherein all members share the management of the business and each is
personality liable for all the debts and obligations of the business
A. Articles of Partnership B. Limited Partnership C. General Partnership D. Public partnership
16. Which of the following is NOT a of a cooperative?
A. Marketing B. Purchasing C. Service D. Supplying
17. In a federated structure of a cooperative
A. both individuals and cooperatives are direct members C. individuals are direct members
B. cooperatives are direct members D. none of the above
18. Which is NOT true about the source of fund of a cooperative?
A. Government officials give charity to cooperative C. It comes from the retention of surpluses
B. Member fee services as a source of fund D. It comes from the gambling lords
19. Which is true about the second stage in the development of Philippine cooperative?
A. It is characterized by the aborted germination of coops by some revolutionary Illustrados
B. It shows an emergence of the coop movement as a potential political force
C. It features a rapid increase of cooperatives as a result of food shortages
D. It is also known as the formation period
20. Which of the following is the cause of cooperative failures in the Philippines?
A. Lack of education and training B. Lack of loyal membership support
C. Lack of government support D. all of the above
21. The willingness of a consumer to buy a commodity at a given price
A. Supply B. Demand C. Price D. Demand function
22. Market where there is a sole producer of a product for which there are no close substitutes
A. monopolistic competition B. monopoly C. market D. competitors
23. The monetary value of all the finished goods and services produced within a country’s borders in a
specific time period, usually one year
A. Foreign exchange B. Product C. Gross Domestic Product D. Labor Market
24. A market where a few sellers account for most of or total production
A. Oligopoly B. monopoly C. Monopolistic competition D. Perfect competition
25. Refers to the quantity of goods that a seller is willing to offer for sale
A. Demand B. Price C. Supply D. Resources
26. Goods which used in place of each other
A. Substitutes B. Consumer goods C. Inferior goods D. normal goods
27. An evaluation of the possible or probable effects of external forces and conditions on the survival
growth of the business
A. industry analysis B. market analysis C. environmental analysis D. SWOT analysis
28. Studies the condition in an industry at a particular time, including the behavior of and relations
between competitors, suppliers, and customers
A. industry analysis B. market analysis C. environmental analysis D. SWOT analysis
29. A tool that lists the strengths, weaknesses, opportunities and threats that face the business
A. industry analysis B. market analysis C. environmental analysis D. SWOT analysis
30. Refers to a group of customers the business aims to cater to
A. market B. competitors C. suppliers D. target market

Identification. Choose the correct answer from the box below

31. Refers to the use of goods and services to satisfy human wants.
32. The portion of income earned that is not spent on consumption or taxes.
33. The transformation of inputs into outputs of goods and services.
34. Basic factors of production enabling the processing of products towards higher stages.
35. The additional output produced by an additional unit of the input.
36. The highest price that the seller can charge for the good being sold, normally set by the government.
37. Written estimate of anticipated government revenues and expenditures during a specific period of time.
38. Exists when quantity demanded is equal to quantity supplied.
39. Is the combined production of several units of a given set of inputs.
40. Are semi-processed goods which are not ready for final use by the consumer, which have undergone some processing but
need to go through additional processing before they can be actually used by the consumer.
41. Is the term used for satisfaction derived from consuming a good /service.
42. Are those that can be changed easily and on short notice.
43. Refers to the flow of goods and resources among the households and business firms.
44. Refers to the product created as a result of the combination of inputs in the production process.
45. Refers to the flow of money among the households and the business firms.
46. Are those that cannot be readily changed during the time period under consideration except at a very great expense.
47. Refers to the additional utility derived from consuming an additional unit of the good.
48. Government income mainly from taxes
49. Value of a particular monetary unit in terms of the goods and services that it can buy.
50. Describes how consumers make decisions about what to buy given their income and prices of goods and services.

production consumption marginal product national budget

total product utility variable inputs output fixed input
government revenues customer theory purchasing power
marginal utility financial flow physical flow intermediate goods
market equilibrium price ceiling resources savings